The knowledge-seeking transition: decentralising innovation and R&D

The two hierarchical organisation structures discussed in Chapter 4 both involved the ‘exploitation’ of firms’ mature sources of competitiveness. The organisational ‘transition’ analysed here involves the increased relevance of the other key priority: ‘exploration’ for new sources of competitiveness. This is analysed as ‘knowledge seeking’ (KS) with MNEs addressing the diverse knowledge and innovation capabilities of an increasing number of countries that possess different creative potentials. The adoption of KS alongside ES (and possibly elements of MS) characterises the modern MNE as a dynamic differentiated network or heterarchy/transnational. The chapter explores in detail two key manifestations of the KS imperative in these MNEs. (i) The decentralisation of innovation. This section incorporates an elaboration of the different competitive roles now played by subsidiaries in the modern MNE, so as to emphasise the emergence of those subsidiaries (product mandates; strategic leaders; competence creating subsidiaries) that aim to innovate for their MNE group from attributes of the host economy. (ii) The decentralisation of R&D. Traces how the academic understanding of R&D in MNEs evolved from an initial quantitative awareness of its significance to a more qualitative comprehension of the varied roles that have been played by differently positioned overseas R&D labs. Some of these roles are seen as co-determined with innovation subsidiaries but others take more stand-alone positions (basic-research units).